Husky posts $4.1-billion loss in Q3 as it recognizes reduced value of assets

CALGARY – Husky Energy is planning further job cuts and asset sales as it looks to consolidate projects in Western Canada to help the company weather the ongoing downturn in the oilpatch.

“Basically we are transitioning from a business with a large number of small plays into a business with a focus on fewer but more material plays,” Husky chief operating officer Rob Peabody said during an earnings conference call Friday.

The company has already cut 1,400 jobs across its offices and field operations this year as it focuses on core assets.

The cuts — about 80 per cent involving contract workers and the rest full-time employees — amount to a 22 per cent overall reduction in the company’s workforce.

Chief executive Asim Ghosh said on the conference call that the job cuts were a “bitter pill” but were necessary as the slid in oil prices has continued longer than expected.

“The downturn has turned out to be more protracted and more severe than even our conservative assumptions,” he said.

“Our planned divestments will allow us to focus a much larger proportion of our capital investments that can earn the best returns.”

Ghosh said the company is looking to divest some of its legacy projects in Western Canada as well as some third-party royalties as it concentrates on projects that can generate a 10 per cent return based on US$40-a-barrel West Texas Intermediate crude and gas priced at C$3 per thousand cubic feet.

The asset sale plans and job cuts come as the company reported a $4.1-billion net loss in the third quarter.

Adjusting to exclude $3.8 billion of impairments and a $167-million writedown, Husky’s loss for the third quarter was $101 million.

A year ago, prior to the collapse of oil and gas prices that began in November, Husky had third-quarter net income of $571 million or 52 cents per share on a diluted basis.

It has also decided to make its January 2016 dividend payment in common shares rather than cash. The dividend rate will continue to be 30 cents per share.

Ghosh said the company’s priorities are maintaining a “bulletproof” balance sheet while preserving its dividend and maintaining growth.

On the possibility of a carbon tax, Ghosh said that he could support an across-the-board carbon tax if the will was there, but that Canada or Alberta as a jurisdiction cannot be disadvantaged.

“It would be politically suicidal for us to do a mea culpa and hang our neck out in a way that disadvantages the industry here,” said Ghosh.

Husky is an integrated oil and gas producer with refinery and retail operations in North America as well as exploration and production in Asia.

Follow @ibickis on Twitter.